Russia,KyrgyzstanClashOverTorpedoPlant

Moscow and Bishkek are in a deadlock over the swap of the controlling stake in the Dastan torpedo plant for a write-off of the Kyrgyz debt to Russia, Kommersant daily said on Thursday.

Moscow and Bishkek are in a deadlock over the swap of the controlling stake in the Dastan torpedo plant for a write-off of the Kyrgyz debt to Russia, Kommersant daily said on Thursday.

Russia has long had its eye on the most significant piece of Kyrgyzstan's defense industry, which produces the advanced VA-111 Shkval torpedoes used by the Russian Navy. The Shkval torpedo and its descendants are supercavitating torpedoes developed by the Soviet Union. They are capable of speeds in excess of 200knots (370 km/h).

Moscow agreed in 2008 to write off Kyrgyzstan's $180 million debt in exchange for a 48 percent stake in the plant. The swap deal was developed in 2009 under the then Kyrgyz president Kurmanbek Bakiyev.

Bakiyev’s regime was overthrown in 2010, but the new Kyrgyz authorities vowed to meet their commitments on Dastan.

In 2011, Kyrgyzstan tried to revive the swap with Russia, but the deal never materialized.

Russia is now asking for a 75 percent-stake in the torpedo plant, citing the depreciation of its equipment, or says it is willing to write-off a lesser share of the Kyrgyz debt for the previously agreed 48 percent stake in Dastan..

“Bishkek has been offered to either a write off a lesser debt for the same assets or to increase the stake transferred to Russia,” Kommersant said, citing a Russian government source.

The Kyrgyz government, which owns an 80 percent stake in the plant, rejects Russia's claims of equipment depreciation and insists the previous agreement must be honored.

Bakiyev's successor, Almazbek Atanbayev, has said the new deal will be possible only if Russia pays a "real market price" for the remaining 27 percent of the stake.

The clash over the plant deal is the latest in a series of issues causing a souring of relations between Moscow and Bishkek, Kommersant said.

During his visit to Moscow in February, Atambayev criticized Russia for not paying the rent for its military base in Kant and questioned the rationality of allowing Moscow to keep a base on Kyrgyz territory.